Do cash gifts count towards income when paying back student finance loan?

spideryvein

If I am given a cash gift of say £100,000 - would that contribute to my income, in the eyes of student finance?
My understanding is no. Student finance repayment is only levied at your salary - not your savings and/or gifts. 
This gift would obviously be subject to other taxes (inheritance tax if applicable and capital gains tax if I commercially gain on it) - but will SFE view it as contributing to my overall income? 
If I have an annual salary of £20,000, for example, they won't suddenly view my salary as £120,000... right?
(and with that scenario, that means no student finance repayment would be due that year, since my income of £20,000 is below the repayment threshold. Correct?)
Thank you!

[Deleted User]

 Only your income counts.
Gifts are not income 

[Deleted User]

spideryvein said:

If I am given a cash gift of say £100,000 - would that contribute to my income, in the eyes of student finance?
My understanding is no. Student finance repayment is only levied at your salary - not your savings and/or gifts. 
This gift would obviously be subject to other taxes (inheritance tax if applicable and capital gains tax if I commercially gain on it) - but will SFE view it as contributing to my overall income? 
If I have an annual salary of £20,000, for example, they won't suddenly view my salary as £120,000... right?
(and with that scenario, that means no student finance repayment would be due that year, since my income of £20,000 is below the repayment threshold. Correct?)
Thank you!

Hi

In the interest of clarity, SFE has nothing to do with repayment of the funding they give you.

Student Loans Company handle the repayments directly. Similarly, your belief that only your salary matters in repayments is wrong.

Unearned Income exceeding £2,000 needs to be declared to HMRC and so, with the completion of a Self Assessment, is considered in your Tax Assessment for the year in which payment is received.

That being said, an inheritance or gift etc itself is not classed as income but any 'profit' or income from that amount is. For example, you put your £100k into an amazing ISA and receive annual interest of £5k (obv. absurd, but is for illustrative purposes) then this would count toward your income and could in fact impact on your repayments.

Ed-1

SFSLExpert said:

spideryvein said:

If I am given a cash gift of say £100,000 - would that contribute to my income, in the eyes of student finance?
My understanding is no. Student finance repayment is only levied at your salary - not your savings and/or gifts. 
This gift would obviously be subject to other taxes (inheritance tax if applicable and capital gains tax if I commercially gain on it) - but will SFE view it as contributing to my overall income? 
If I have an annual salary of £20,000, for example, they won't suddenly view my salary as £120,000... right?
(and with that scenario, that means no student finance repayment would be due that year, since my income of £20,000 is below the repayment threshold. Correct?)
Thank you!

Hi

In the interest of clarity, SFE has nothing to do with repayment of the funding they give you.

Student Loans Company handle the repayments directly. Similarly, your belief that only your salary matters in repayments is wrong.

Unearned Income exceeding £2,000 needs to be declared to HMRC and so, with the completion of a Self Assessment, is considered in your Tax Assessment for the year in which payment is received.

That being said, an inheritance or gift etc itself is not classed as income but any 'profit' or income from that amount is. For example, you put your £100k into an amazing ISA and receive annual interest of £5k (obv. absurd, but is for illustrative purposes) then this would count toward your income and could in fact impact on your repayments.

ISA is the worst example you could have given as ISA interest is tax exempt and does not go on a tax return. But any taxable interest counts as unearned income but this only impacts student loan repayments if total unearned income is over £2,000 and only if you have to complete a tax return. You don't have to complete one just because your unearned income is over £2,000.
https://www.litrg.org.uk/tax-guides/students/student-loans/plan-2-student-loans/i-have-fill-tax-return-how-do-self-assessment

[Deleted User]

Thanks for the correction, Ed.

I thought it was apparent from my stellar ISA offering £5k in annual interest on a balance of £100k, that my example was an extremely crude way of saying the OP was fundamentally incorrect in the assumption that unearned income doesn't impact student loan repayments was incorrect.

I will be sure to be more literal, far more detailed and less frivolous in my posts in future.

Tattybumpkin

My daughters student fees could be paid for from her trust fund. However it appears sensible to take out the loan and ensure money is invested wisely. On that note and the main question is after leaving Uni and say she is not a high earner, she will be able to draw funds from the trust to top up earnings etc, if these are invested in tax free source and say draws £1,000 pm from trust/investments and earns £2,000 pm herself.  So £24,000 taxable income from work, with an addition £12,000 pa from trust, would her salary be taken as £36,000 and open to paying SLR, or would she be seen as under the £25,000 and not accountable to pay the SLR? 

Hence questioning if taking the loan is a viable solution to result in paying 9% on loan? 

silvercar

I can’t answer the trust income question, though it may hinge on whether she is required to complete a tax return.

She won’t be paying 9% on the loan, she will be paying 9% of income above the threshold. The interest on the loan is variable, but nowhere near 9%.